Volume 19 | Issue 25 | November 3 - 9, 2006

progress report/ GOOD JOBS NEW YORK

Make retailers earn subsidies with better pay & benefits

By Bettina Damiani

When all is said and done the Lower Manhattan Development Corporation (which is closing its doors) will have allocated over $2 billion in cash grants to revitalize Lower Manhattan after the attacks of September 11, 2001.

Nevertheless, state legislators - led by Assembly Speaker Sheldon Silver - weren't convinced these subsidies were sufficient and piled on another $300 million worth. Rents for buildings on the World Trade Center Site and 7 World Trade Center are subsidized. Commercial firms and retailers will benefit from sales tax breaks. The commercial rent tax for retailers in Lower Manhattan has been permanently eliminated. Businesses relocating to the area are eligible for a $3,000-per-employee tax credit. Government agencies will occupy space in the Freedom Tower, which is being built with tax-free Liberty Bonds and other post-9/11 subsidies.

These subsidies shouldn't be necessary. Backward planning for the World Trade Center site, and the allocation of resources trapped officials into promoting office towers before the market was ready. Officials embarked on the wasteful strategy of using tax breaks to lure companies to a site entangled in a political and emotional battle about what to build.

Taxpayers, employers and residents should expect public investments to benefit the city's economy and create good jobs.

The 600,000 square feet of retail space, which are eligible for the subsidies mentioned earlier, could create about 2,000 jobs for the redeveloped World Trade Center site and is a perfect opportunity to generate good paying jobs and shift the tide from toothless subsidies to ones that include safeguards for new employees.

How will this happen since the $300 million subsidy package mostly fails to include job creation or retention commitments? Absent the state Legislature's insistence on job growth, development officials and the Port Authority should give preference to W.T.C. retailers who offer living wages, a good health plan and training for job advancement.

It won't be a hard sell considering Lower Manhattan is a retailers' market. The area has a renowned customer base as home to city government, some of the world's wealthiest banking and stock exchanges firms attracting 311,000 workers every workday. Billions of dollars are being spent to upgrade the transportation systems drawing more firms and shoppers Downtown. Residents living in Tribeca and the expanding Financial District earn some of the highest incomes in the country and far outpace the majority of other New Yorkers. Currently the area sees 8 million visitors a year and more will be coming after the W.T.C. memorial is built.

Retailers follow the money and Lower Manhattan is one of the hottest neighborhoods in New York City. Upscale stores like Hickey Freeman, BMW, and Sephora have recently moved into the area and Hermes, Tiffany & Co., and Whole Foods are also hustling to get in on the action and have signed leases. Additionally, managers know that higher wages and development mean less staff turnover. A well-trained, familiar employee that caters to customers is a critical component to a successful business.

The average wage of a retail employee in New York City is $10.59 an hour. While better than the Federal minimum wage, that is still hard to live on in New York City. And more than half of these jobs don't offer health care and other benefits, leaving employees to rely on public or private services for basic needs like doctor visits, child-care and housing subsidies. Ensuring employees who work at subsidized firms earn a living wage and have access to promotions, will help eliminate double dipping - when companies receive incentives but their employees are paid so little they must rely on public services.

Subsidizing W.T.C. retail businesses operating in a lucrative environment gives the city, and in particular the Port Authority (which has the ultimate say as the landlord for retail space in the W.T.C.), leverage to favor potential tenants who pay living wages and provide benefits and opportunity for career advancement.

Five years after the attacks on Lower Manhattan, it's time for leaders in the rebuilding effort to rally for jobs that benefit low-income New Yorkers. These efforts would compliment a retail strategy that meets the needs of a 24/7, mixed-use community by ensuring a better-trained and happier workforce to serve local residents.

Bettina Damiani is project director for Good Jobs New York, a non-profit advocacy group which monitors economic development subsidies.

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